M/s. Kotarki Constructions Pvt. Ltd. Vs. Asst. CIT (Karnataka High Court)
The powers of reassessment u/S.147/148 of the Act have to be invoked with great amount of circumspection and the relevant material on record, on the basis of which, a “reasonable opinion” can be framed in contrast with a mere “change of opinion” for initiating the reassessment proceedings.
This Court is satisfied that there was no material on record before the Assessing Authority indicating any failure on the part of the assessee to truly and fully disclose the relevant material before the original Assessing Authority while passing the original assessment order u/S.143(3) of the Act on 28.03.2013 and the Assessing Authority had discussed all the relevant facts and evidence and had rightly allowed, albeit partly, the deduction u/S.80-IA(4) of the Act to the assessee and there was no jurisdiction that the Respondent-Assessing Authority to invoke Section 147/148 of the Act for reassessment for the A.Y. 2010-11 in the present case.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
The petitioner- assessee M/s. Kotarki Constructions Pvt. Ltd. has filed this writ petition in this Court on 29.11.2016 challenging the Notice for Re-assessment for the A.Y. 2010-11 issued by the Assistant Commissioner of Income Tax, Circle-1, Kalaburgi, u/s. 147/148 of the Income Tax Act, 1961.
2. The reasons communicated on 15.03.2016 to the petitioner- assessee for such re-opening/re-assessment as produced on record are quoted below for ready reference:
“In the assessment completed u/s 143(3), the assessee was allowed a deduction of Rs. 1,82,03,125/- u/s 80-IA. However, it was verified during the assessment proceedings in the case of the assessee for the AY 2013-14 that the assessee is only a works contractor and not a developer within the meaning of Section 80-IA(4). As such, the assessee is not eligible to claim deduction u/s 80-IA. I, therefore, have reason to believe that income chargeable to tax has escaped assessment within the meaning of section 147 of the Income-tax Act, 1961.
Accordingly notice U/s. 148 is issued with the prior approval of Pr. Commissioner of Income Tax, Gulbarga.”
3. The original Assessing Authority, while passing the Assessment Order under Section 143(3) of the Act, earlier on 28.03.2013, upon a detailed scrutiny of the records of the petitioner- assessee, engaged in the business of construction of roads, buildings, dams, National Highways etc., namely infrastructural facilities was allowed the deduction u/s. 80-IA(4) of the Act, for the A.Y. 2010-11 vide Annexure- C dated 28.03.2013 after discussing all the relevant contracts and certificates issued by the concerned Executive Engineers of the National Highway Divisions of Public Works Department and others, and allowed the said claim of the deduction under Section 80-IA(4) of the Act, partly to the extent of 68.75% against the claim of the petitioner- assessee, and disallowed the remaining part on the ground that some of the works contracts were only for improvement and re-laying of the roads, which do not fall within the definition of “Developing, operating and maintaining any infrastructure facility” for which such deduction in the form of incentives is given to the Developers of the Infrastructure facilities u/s. 80-IA(4) of the Act.
4. The relevant part of the original Assessment Order passed by the Assessing Authority on 28.03.2013 is quoted below for ready reference:
“10- DEDUCTION CLAIMED U/S. 80-IA OF THE INCOME TAX ACT, 1961:
The assessee claimed deduction of Rs. 1,22,33,272/- u/s. 80-IA of the Income Tax Act. In support of the above, the assessee also furnished audit report in Form No. 10CCB. As per the audit report, the assessee is engaged in the business of Development, operation, maintenance of an infrastructure facility namely developing of roads.
It is claimed that the assessee company has undertaken the works of development of roads from various Government Departments which are eligible for the deduction u/s. 80-IA of the Income Tax Act, 1961. The details of works undertaken during the year are as under;
